Organisational Structures Management and Organisational Behaviour 7th Edition PART 6 Organisational Structures

Organisation Structure and Design Management and Organisational Behaviour 7th Edition CHAPTER 15 Organisation Structure and Design

The meaning of organisational structure is the pattern of relationships among positions in the organisation & among members of the organisation allows the application of the process of management creates a framework of order & command through which the activities of the organisation can be planned, organised, directed & controlled

Objectives of structure The economic & efficient performance of the organisation & the level of resource utilisation Monitoring the activities of the organisation Accountability for areas of work undertaken by groups & individual members of the organisation

Objectives of structure Co-ordination of different parts of the organisation & different areas of work Flexibility in order to respond to future demands & developments & to adapt to changing environmental influences The social satisfaction of members working in the organisation Knight

Importance of good structure Good organisational structure does not by itself produce good performance. But a poor organisational structure makes good performance impossible, no matter how good the individual managers may be. Drucker The allocation of responsibilities, the grouping of functions, decision making, co-ordination, control & reward are all fundamental requirements for the continual operation of an organisation. The quality of a structure will affect how well these requirements are met. Child

The human element The actual operation of the organisation & success in meeting the business objectives will depend on the behaviour of people who work within the structure & who give shape & personality to it In an IMD survey, the commitment & involvement of employees ranked second only to top management as a key success factor in restructuring

Argyris – a critic of formal organisations Argyris argues that formal, bureaucratic organisations restrict individual growth & self fulfillment In the psychologically healthy person, this causes a feeling of failure, frustration, & conflict He argues that organisations should provide a more authentic relationship for its members

The relationship between people & organisations The operation of the organisation & actual working arrangements will be influenced by – Style of management Personalities of members The informal organisation

Levels of organisation Technical level – involves specific operations & discrete tasks the actual job or tasks to be done the performance of the technical function Managerial level – involves the co-ordination & integration of work at the technical level Community level – involves broad objectives & the work of the organisation as a whole

Interrelated levels of organisation Figure 15.1 Interrelated levels of organisation

Importance of the hierarchy Authority is & is likely to continue to be less acceptable than in the past. Better educated & more independent people expect to be consulted rather than told what to do. Stewart The hierarchy is not dead, it has just changed its form. The trappings of power in the modern workplace may have been toned down, but the boss is still the boss. To confuse informality with the end of the organisational pecking order is a mistake. Jebb

Examples of purpose & implications for organisational design Figure 15.2 Examples of purpose & implications for organisational design Source: Reprinted with permission from Richard Lynch, Corporate Strategy, Third edition, Financial Times Prentice Hall (2003), p.667, with permission from Pearson Education Ltd.

Examples of purpose & implications for organisational design Figure 15.2 Examples of purpose & implications for organisational design Source: Reprinted with permission from Richard Lynch, Corporate Strategy, Third edition, Financial Times Prentice Hall (2003), p.667, with permission from Pearson Education Ltd.

Examples of purpose & implications for organisational design Figure 15.2 Examples of purpose & implications for organisational design Source: Reprinted with permission from Richard Lynch, Corporate Strategy, Third edition, Financial Times Prentice Hall (2003), p.667, with permission from Pearson Education Ltd.

Basic considerations in organisational structure design Figure 15.3 Basic considerations in organisational structure design

Task functions Developing the goods /services Manufacturing the goods / services Marketing the goods / services Financing the organisation Basic activities of the organisation related to the actual completion of the production process & directed towards specific & definable end results. Woodward

Element functions Supportive of the task functions An intrinsic part of the management process Examples include personnel, planning, management services, public relation, etc. Woodward

Task & element functions – implications of organisational structure Failure to distinguish between the two types of functions can lead to confusion in the planning of structure & in the relationship between members of the organisation

Division of work by major purpose or function Figure 15.4 Division of work by major purpose or function

Division of work by product or service Figure 15.5 Division of work by product or service

Division of work by location

Grouping considerations Decisions on the methods of grouping will be based on – The need for co-ordination The identification of clearly-defined divisions of work Economy The process of managing the activities Avoiding conflict The design of work organisation taking into account the nature of staff employed, their interests & job satisfaction

Centralisation – the advantages Easier implementation of a common policy for the organisation as a whole A consistent strategy across the organisation Prevents sub-units becoming too independent Improved economies of scale & a reduction in overhead costs Greater use of specialisation Improved decision-making

Decentralisation – the advantages Enables decisions to be made closer to the operational level of work Increased responsiveness to local circumstances Improved level of personal customer service More in keeping with developments in flatter & more flexible structures

Decentralisation – the advantages Support services, such as administration, are more likely to be effective if provided as close as possible to the activities they are intended to serve Provides opportunities for training & development in management Usually has an encouraging effect on the motivation & morale of staff

Principles of organisation Objective Specialisation Co-ordination Authority Responsibility Definition Correspondence Span of control Balance Continuity

Spans of control The number of subordinates who report directly to a given manager or superior

Spans of control Factors influencing the span of control – Nature of the organisation, complexity of work, range of responsibilities, similarity of function Ability & personal qualities of the manager Amount of time manager is available to spend on subordinates Ability & training of subordinates Effectiveness of co-ordination & nature of communication Physical location Length of scalar chain

Spans of control – width Too wide, it becomes difficult to supervise subordinates effectively & places more stress on the manager & may result in slowness to adapt to change Too narrow, it may present problems of co-ordination & consistency in decision-making & wider communication across the organisational structure

Chain of command The number of different levels in the structure of the organisation, the chain of hierarchical command Establishes the vertical graduation of authority & responsibility & the framework for superior–subordinate relationships

Individual authority relationships Line – flows directly down through the structure Functional – relationship between people in specialist or advisory positions Staff – arise from the appointment of personal assistants to senior managers Lateral – exist between individuals in different departments or sections especially those on the same levels

Inverted organisations These place customers at the summit and top management at the base Will be accompanied by the devolution of power and delegation to the empowered, self-managing workers near the top of the inverted pyramid

Matrix organisations The matrix organisation is a combination of – Functional departments providing the stable base for specialised activities and a permanent location for members Units that integrate various activities of different functional departments in a project team

Poorly designed structures Lack of design is – Illogical Cruel Wasteful Inefficient Urwick

Consequences of badly designed structures Low motivation & morale Late & inappropriate decisions Conflict & lack of co-ordination Poor response to new opportunities & external change Rising costs Child